Russian Federation

Freer trade and well targeted support are keys to food security in emerging markets - OECD report

17/03/2009 - As the global economic slowdown threatens to increase food insecurity among the world’s poor, a new OECD report calls on the major emerging economies to ensure their agricultural policies are focussed on long-term sustainability rather than short-term fixes.

Agricultural Policies in Emerging Economies: Monitoring and Evaluation 2009 looks at the measures taken by the governments of Brazil, Chile, China, India, Russia, South Africa and Ukraine to ease the burden on consumers and to ensure food supplies within the context of higher and more volatile prices over recent years.

The most common responses included reducing or suspending import tariffs on food or imposing export barriers such as taxes. But export barriers do not help those most in need of food security, the report argues. They harm domestic farmers and limit incentives to produce. Export restrictions also harm import-dependent trading partners.

Although these measures may increase food supplies in exporting countries in the short term, increasing protectionism and reinforcing moves towards self-sufficiency would increase the volatility of agricultural commodity prices on world markets and reduce trade.

The report shows that government support to farmers in emerging economies represented between 4% of total farm receipts in Chile to 14% in Russia in 2005-07, much less than the OECD average of 26%.

The global economic slowdown is likely to cause governments to focus on short-term policy measures thus undermining long-term policy objectives. The financial crisis may reduce the availability of loans to farmers and other agricultural businesses dependent on credit. Foreign direct investment - crucial for rural development – is also likely to fall.

In order to strengthen the agricultural sector in the long term, the report recommends diverting more government support away from commodity-specific and market distorting measures, that are attracting a disproportionate amount of subsidy, to the provision of public goods such as research, infrastructure, training and marketing.

The report welcomes the increasing levels of government support for public goods in the seven featured countries, but further public investment is needed to match supply more efficiently to demand, to develop higher-yielding of crops, improve the long-term competitiveness of agriculture and provide higher and more sustainable income levels for farmers.